Bass disposed of two major businesses, its tenanted pub estate and the Gala bingo division, to buy-ins in December. BT Capital Partners backed Roger Myers and Hugh Osmond’s GBP564 million (ecu 849 million) acquisition of the estate of over 1,400 tenanted pubs. PPM Ventures joined forces with Nat Solomon and chief executive John Kelly, paying a total consideration of GBP279 million (ecu 420 million) for Gala, which operates an estate of 130 bingo clubs.
The pub business buy-in team – the company’s new name had not been decided at press time -has a strong track record in the leisure sector: Roger Myers was a driving force behind Pelican Group, while Hugh Osmond was a founder of Pizza Express. The two are believed to have invested several million pounds in the buy-in, alongside GBP82.5 million of equity and PIK prefs from BT Capital Partners. Bankers Trust and Morgan Stanley arranged GBP455 million of debt including senior loans, revolving credit and a high-yield issue.
The new owners are planning to float the estate, which generates profits of nearly GBP70 million, within three years.
The Gala buy-in, which raised a total funding package of around GBP300 million, came at the end of what had otherwise been a quiet year for PPM Ventures in theUK. PPM underwrote GBP111 million of equity and loan stock, a substantial proportion of which will be syndicated. JP Morgan arranged a GBP134 million senior loan and additional working capital facilities. The GBP279 million acquisition consideration included cash balances of GBP43 million. Nat Solomon, who becomes chairman of the new company, is also chairman of Crown Leisure. Incumbent chief executive John Kelly will also be supported by Richard Sowerby, currently a consultant with Western Union.
Gala, which together with Rank has a 60% share of the UK bingo market, has seen its profits fall to GBP24 million from some GBP40 million over the last three years, largely as a result of the impact of the National Lottery. However, following deregulation, bingo is able to compete on a more equal footing with the National Lottery, and is recovering well. Total stakes, excluding cash machines, were up 7% to GBP1 billion in the year to March 1997. John Kelly commented: “Bingo admissions are gradually recovering. Gala is in an exceptionally strong position to take advantage of the new, fairer climate and drive the whole market forward”.